Gordon and Cook highlight important changes to Ohio’s LLC rules
Effective February 11, 2022, changes to the Ohio Revised LLC Act gives limited liability companies – and their owners – more flexibility. According to Columbus CEO article “A Guide to Ohio’s new Limited Liability Company rules,” new provisions to the LLC law could significantly impact existing operating agreements. So, owners should work with an attorney to adjust their agreements, especially regarding fiduciary duties, management structure, voting and distributions.
Bricker litigator Chris Gordon contributes to the article, encouraging business owners to evaluate how changes to the law may impact their businesses from a litigation perspective, especially in the case of feuding LLC members. Because the new law allows “disassociation” of a member, or preventing a member from participating in the LLC while still entitling them to distributions, there is potential for litigation to come into play as members fight for control of the business. Gordon advises that business owners “need to address in your operating agreement how those disputes will be resolved. He also states that “while using this tool in litigation may be your only option, it will be more cost-effective to deal with these issues when drafting or amending the operating agreement.”
Bricker tax and corporate attorney Justin Cook adds that business owners need to refresh their agreements to account for changes in indemnification provisions of the law. He says that “[w]hile providing indemnification rights in organizational documents is important for attracting qualified people to manage your company’s activities, it is equally important to understand the scope of your commitments.”